Arizona Public Safety Has Room To Pledge

The $4.1 billion Arizona Public Safety Personnel Retirement System will likely pledge between $100 million and $200 million to private equity throughout the rest of 2010, said Private Equity Strategist Mark Steed.

“Our cost of capital has never been higher, so we see little reason to venture too far into the exotic,” Steed told Buyouts. Arizona Public Safety will opportunistically commit to firms “whose strategies are complementary and disciplined,” and that align their interests with those of their LPs, Steed said.

In 2009, the state retirement system committed up to $30 million to Drug Royalty II, which invests in pharmaceutical royalty streams, along with co-investment capital of up to $20 million. And up to $40 million went to OHA Strategic Credit Fund, which is earmarked for opportunities in stressed and distressed loans, bonds and other investments.

Last year, Arizona Public Safety raised its target to the asset class to 8 percent, with a range of 6 percent to 12 percent, from a 6 percent target, with a range of zero to 10 percent. The pension’s actual allocation now stands at about 7 percent, said Steed.

The Arizona Public Safety Personnel Retirement System uses consultants StepStone Group for U.S. and South American private equity investments and Albourne Partners for global private equity.